Content & Technology Policy Report May 23, 2014

“Weekly copyright related summary of issues, including congressional, judicial, administration, international and industry updates, provided courtesy of American Continental Group (ACG).”

I. Headlines and Highlights:

Congress heard testimony from Federal Communications Commission (FCC) Chairman Tom Wheeler on net neutrality this week. Also in Congress, small business owners called upon Members to ensure their IP rights are recognized internationally, and members of the Creative Rights Caucus convened to hear from digital content creators and distributors. On the judicial front, U.S. Federal Circuit Court of Appeals Chief Judge Randall Rader announced that he will step down from his position, and the U.S. Supreme Court held that “laches” does not bar copyright infringement suits for damages in Petrella v. Metro-Goldwyn-Mayer, Inc. In the Administration this week, the U.S. Patent and Trademark Office (USPTO) held its first roundtable discussion on “remixes, first sale, and statutory damages” in Nashville, TN. On the international front, the CEO of the Australian animation and visual effects studio Animal Logic spoke out against online piracy and suggested educating children at a young age that illegal downloading is wrong. Finally, in industry news, AT&T announced its $49 billion acquisition plan for DirecTV, and online video service Vimeo unveiled plans to implement for a “Copyright Match” system. Continue reading for further details on this week’s news.

II. Congressional Updates:

On Tuesday, the House Committee on Energy and Commerce’s Subcommittee on Communications and Technology held an FCC oversight hearing with Commission Chairman Tom Wheeler as the sole witness. The hearing opened with Chairman Greg Walden (R-OR) and several other senior Republicans offering stern criticism of the FCC’s recent activity, focusing in particular on net neutrality rules that reclassify broadband under traditional common-carrier telecom regulations in Title II of the Telecommunications Act after the U.S. Court of Appeals for DC threw out the FCC’s old net neutrality rules in January. Chairman Walden said common-carrier regulations were focused on a monopoly telecom carrier and “harken back to a world in which twisted copper was the only portal for consumers to the communications network and voice was the only service.” Rep. Bob Latta (R-OH) indicated his intention to introduce legislation that would prohibit the FCC from reclassifying broadband under Title II. Rep. Joe Barton (R-TX) said he sees “no reason to try to shoehorn some sort of a regulatory approach” to constrain Internet service providers from charging for carrying certain types of web traffic. Several questions focused on the pending mergers of telecomm giants Comcast with Time Warner and AT&T with DirecTV. Ranking Member Anna Eshoo (D-CA) and Rep. Doris Matsui (D-CA) called upon the Chairman to conduct oversight hearings on the matter. Other members raised concerns about the availability of broadband and wireless services in their rural districts, while some queried Mr. Wheeler on progress being made toward subsidizing IT technologies in struggling schools and library systems.

On Wednesday, the Creative Rights Caucus held a tech briefing and demo on “Innovation in Today’s Environment.” Caucus Co-Chair and Rep. Judy Chu (D-CA) opened the event saying that the tech and content industry need to have a symbiotic relationship. She also emphasized that online piracy is a huge problem that hurts real people. Following Rep. Chu was Rep. Tom Marino (R-PA) who stood in for Co-Chair Rep. Howard Coble (R-NC). Rep. Marino stated that it was a good start to have all facets of the industry present at the event and expressed a hope that consensus could be reached by the industry, without government involvement. Rep. Jerry Nadler (D-NY) also gave an opening statement where he explained that, because IP does not fall on party lines, there is a chance to get something done. Rep. Lucille Royball Allard (D-CA) was also present. Panelists at the event included representatives from Digital Entertainment Content Ecosystem, HBO, Netflix and UFC.

On Thursday, the House Committee on Small Business’ Subcommittee on Agriculture, Energy, and Trade convened to hear testimony from a panel of small business stakeholders on unfair trade practices, including IP theft. The panel explained the ongoing difficulties they face in having their IP rights recognized internationally and they highlighted some of the remedies they would support if included in the Transatlantic Trade and Investment Partnership (TTIP), the Trans-Pacific Partnership (TPP), and Trade Promotion Authority (TPA). The Subcommittee queried the panel about the concerns facing their organizations, including what the direct economic impacts of IP theft are, and the responsiveness of the U.S. government and various international bodies to IP claims.

The House Judiciary Committee’s Subcommittee on IP is holding a field hearing on June 2nd in New York, NY on the issue of first sale. Witnesses are expected to include: John Villasenor, UCLA; Matt Glotzer, former Fox Digital executive; Emery Simon, BSA, John Ossenmacher, ReDigi; Andrew Shore, Owners Rights Initiative (ORI); and several others such as representatives from the New York Public Library, Public Knowledge, John Wiley & Sons, and an independent author.

III. Judicial Updates:

U.S. Federal Circuit Court of Appeals Chief Judge Randall Rader announced today that he will step down from his position on May 30th of this year. After stepping down, he will remain active on the court and plans on teaching and lecturing. Judge Sharon Prost will be Judge Rader’s successor as Chief Judge.

Petrella v. Metro-Goldwyn-Mayer, Inc. 12-1315 — On Monday, in an opinion by Justice Ginsburg, the U.S. Supreme Court overruled a decision of the Ninth Circuit Court of Appeals that Petrella’s copyright infringement suit was barred by the defense of prejudicial and unreasonable delay (“laches”). In 1991, Petrella renewed the copyright to the screenplay for the film “Raging Bull.” She began corresponding intermittently with MGM to contest its continued exploitation of the film, but did not file her copyright infringement suit until 2009. Both the district court and the Ninth Circuit found that laches completely barred any recovery, though the three-year statute of limitations under Copyright Act section 507(b) barred recovery only for acts prior to 2006. The Supreme Court held laches could not bar a copyright infringement suit for damages brought within the statute of limitations. “Inviting individual judges to set a time limit other than the one Congress prescribed… would tug against the uniformity Congress sought to achieve when it enacted §507(b).” In extraordinary circumstances, however, laches could curtail certain equitable relief. Justice Breyer, joined by Chief Justice Roberts and Justice Kennedy, filed a dissenting opinion. (Source: IPO Daily News)

IV. Administration Updates

The USPTO held its first roundtable discussion on “remixes, first sale, and statutory damages” this week. Stakeholders met at Vanderbilt University Law School in Nashville, TN to discuss the issues in the context of the ongoing examination of copyright law at the Copyright Office, USPTO, and in Congress. Participants included: Sandra Aistars, Copyright Alliance; Rick Carnes, Songwriters Guild of America; Steven Marks, RIAA; Benjamin Sheffner, MPAA; and several other stakeholders from academia and industry. The next roundtables are scheduled for June 25th June 25th (Wasserstein Hall, Harvard University Law School), July 29th (location in Los Angeles, CA to be announced) and July 30th (the Bancroft Hotel in Berkeley, CA).

Today is the deadline for filing comments at the Copyright Office on its music licensing study, where it is evaluating the effectiveness of existing licensing methods. The comments gathered will be supplemented by public stakeholder meetings and eventually reported to Congress.

The Copyright Office will co-host a gala with the Copyright Society of the U.S.A. on June 7th, in the Great Hall of the Thomas Jefferson Building of the Library of Congress. The gala will celebrate the 60th anniversary of the Copyright Society of the U.S.A (CSUSA) and the field of copyright law. At the gala, President Joseph Salvo will present the Copyright Society’s Excellence in Creativity Award to composer and dramatist Stephen Schwartz (whose works include “Wicked,” “Pippin,” and “Godspell”). The gala celebration coincides with the annual meeting of the CSUSA, which will take place at the Fairmont Washington, D.C., Georgetown Hotel from June 8th through June 10th. The Honorable Judy Chu, Representative from the 27th Congressional District of California and member of the House Judiciary Committee, and the Honorable Beth Brinkmann, Deputy Assistant Attorney General of the Civil Division of the U.S. Department of Justice, will deliver keynote addresses. Representative Chu will speak the morning of June 10th about the role of Congress in copyright policy, and Ms. Brinkmann will speak at lunch on June 9th about the role of the Justice Department in copyright litigation. Also on June 9th, Register of Copyrights Maria A. Pallante will present an overview of key legal and regulatory developments for the Copyright Office. Robert Brauneis, Abraham Kaminstein Scholar in Residence; Jacqueline Charlesworth, General Counsel; and Karyn Temple Claggett, Director of Policy and International Affairs, will also speak for the Copyright Office. Register for the event here.

U.S. and EU negotiators met in Arlington, VA this week for the fifth round of Transatlantic Trade and Investment Partnership (TTIP) negotiations. Negotiators for IP rights were amongst those officials involved in this week’s meetings.

V. International Updates:

Zareh Nalbandian, CEO of the Australian animation and visual effects studio Animal Logic, spoke out against online film piracy this week, saying that children should be taught early on that illegal downloading is wrong. “If you look at every film that’s released around the world, every DVD that’s sold, if we are losing 10 percent because (people) are downloading illegally we are talking hundreds of millions of dollars of revenue lost which is revenue that will not be reinvested in making new product.” The creative industries contribute $93.1 billion to Australia’s annual economic output.

VI. Industry Updates:

On Sunday, AT&T agreed to purchase DirecTV for $49 billion. The move would bring AT&T into the pay-TV realm. The deal, which would set AT&T’s pay-TV customer base at 26 million, comes on the heels of the pending $45 billion Comcast – Time Warner merger. Comcast’s merger deal would put its subscriber base at 30 million. AT&T’s move will likely face regulatory scrutiny similar to that being faced by Comcast.

Earlier this week, the Internet Association released a white paper, “Harmonizing Intermediary Immunity for Modern Trade Policy.” The paper focuses on incorporating Sec. 230 of the Communications Decency Act into the TTIP without reference to Sec. 230’s exceptions, including for intellectual property and for criminal liability.

According to a report by Variety, Google’s YouTube unit is planning to acquire Twitch, a live-videogame streaming and broadcasting service, for north of $1 billion. The move would help bolster the video service’s offerings, but the company could be faced with anticompetitive concerns, since YouTube already serves over 6 billion hours of content per month to 1 billion users. Read more here.

Vimeo is poised to implement a “Copyright Match” system that is aimed at preventing music copyright infringement on its site. The company’s CEO, Kerry Trainor, toldBillboard this week that the system will allow Vimeo to be “a little more controlled in terms of making sure that copyrighted material in its entirety isn’t being synched to Vimeo without proper licensing.” The system will differ from YouTube’s Content ID system in that users will be able to appeal alleged infringing matches for their uploaded content. If the content is deemed to be infringing, Vimeo’s system will direct the user to its Music Store to purchase the rights to use one of the many tracks in its library. Trainor said “we really want to educate creators on the boundaries of fair use and the ways in which music and other material can and can’t be used, and offer as many solutions as we can. We want to empower people who want to use music to do so, with full understanding of what’s allowed under the law.”

On Wednesday, Spotify revealed that its paid user base now sits at 10 million, and over 40 million users in 56 markets actively listen to music on the service. Last year, in March, the company had 6 million paid users.

Simon & Schuster has agreed to distribute its e-book content over subscription services Oyster and Scribd, making it the second major publishing company to partner with the companies. Oyster and Scribed launched in 2013 with content from HarperCollins, another major publisher. The agreement will add more than 10,000 titles to the two e-book companies’ libraries. In a statement, Simon & Schuster’s VP of Global e-book Strategy, Doug Stambaugh, said “Obviously this kind of subscription model has been very beneficial for movies and television, and we want to try it out and see if this will be something that expands the market for books.”

Caroline Little, President and CEO of Newspaper Association of America, published an op-ed in the Milwaukee Journal Sentinal last week titled “Strong copyright law supports journalism and informed communities.” She writes about the ongoing examination of U.S. copyright law in the context of the digital age that is currently underway in the Administration and Congress. From the perspective of the newspaper industry, Little writes “While targeted enforcement actions focusing on business ventures that take and resell our content may continue to be necessary, the newspaper industry is also determined to find business solutions rather than legal remedies. Ultimately, the best approach for fairly compensating newspapers and other publishers is through the licensing of news content for business purposes.” Her full op-ed is available here.

SAG-AFTRA and SoundExchange worked to identified $2.3 million in unpaid royalties for members of the media and entertainment union, according to an announcement this week. “While we are best known for our focus on music, SoundExchange also collects royalties for actors, comedians and spoken word recordings,” said SoundExchange President and CEO Michael Huppe. “The match with SAG-AFTRA allows SoundExchange to reach all of these important performers (both music and non-music) who are entitled to their share of royalties from streaming radio services.”

The Wall Street Journal published an article on the Authors Guild Dinner this week, titled “A Dinner to Help Other Authors Eat.” The article notes the Authors Guild’s efforts to assist authors in need, through the establishment of a fund that provides around $200,000 a year in aid. Read the article here.

A new company called BitLit has raised seed-funding to develop a service that allows users to access their print-edition books as e-books. Users must prove that they own their print books in order to use the service, and while some e-book titles are free to users if they own the print edition, some will require a one-time fee. The service currently has more than eighty publishers on board and over 10,000 e-book titles.